COMMERCIAL LAW DOCTRINES

Doctrine of alter ego. A doctrine based upon the misuse of a corporation by an individual for wrongful
or inequitable purposes, and in such case the court merely disregards the corporate entity and holds
the individual responsible for acts knowingly and intentionally done in the name of the corporation.
The doctrine imposes upon the individual who uses a corporation merely as an instrumentality to
conduct his own business liability as a consequence of fraud or injustice perpetuated not on the
corporation, but on third persons dealing with the corporation. [Cited Sulo ng Bayan, Inc. v. Araneta,
Inc., GR L-31061 Aug. 17, 1976].
Doctrine of corporate negligence. [T]he judicial answer to the problem of allocating hospital’s liability
for the negligent acts of health practitioners, absent facts to support the application of respondeat
superior or apparent authority. Its formulation proceeds from the judiciary’s acknowledgment that in
these modern times, the duty of providing quality medical service is no longer the sole prerogative and
responsibility of the physician. The modern hospitals have changed structure. Hospitals now tend to
organize a highly professional medical staff whose competence and performance need to be
monitored by the hospitals commensurate with their inherent responsibility to provide quality medical
care. [Professional Services, Inc. v. Agana, GR 126297, Jan. 31, 2007].
Doctrine of corporate responsibility. The doctrine following which it was held that] a hospital x x x
has the duty to see that it meets the standards of responsibilities for the care of patients. Such duty
includes the proper supervision of the members of its medical staff. [Professional Services, Inc. v.
Agana, GR 126297, Jan. 31, 2007].
Doctrine of disregarding the distinct personality of the corporation. [The doctrine stating that] when
“the notion of legal entity is used to defeat public convenience, justify wrong, protect fraud, or defend
crime, x x x the law will regard the corporation as an association of persons, or in the case of two
corporations, merge them into one, the one being merely regarded as part or instrumentality of the
other. [Yutivo & Sons Hardware Co. v. CTA, 1 SCRA 160]. The same is true where a corporation is
a dummy and serves no business purpose and is intended only as a blind, or an alter ego or business
conduit for the sole benefit of the stockholders. [McConnel v. CA, 1 SCRA 722].
Doctrine of equivalents. The rule stating that an infringement also takes place when a device
appropriates a prior invention by incorporating its innovative concept and, although with some
modification and change, performs substantially the same function in substantially the same way to
achieve substantially the same result. [Smith Kline and Beckman Corp. v. CA, 409 SCRA 33].
Doctrine of equivalents test. A test established to determine infringement which recognizes that minor
modifications in a patented invention are sufficient to put the item beyond the scope of literal
infringement. Thus, an infringement also occurs when a device appropriates a prior invention by
incorporating its innovative concept and, albeit with some modification and change, performs
substantially the same function in substantially the same way to achieve substantially the same result.
[Godinez v. CA, GR 97343. Sep. 13, 1993]. Compare with Literal infringement test.
Doctrine of legal entity of the separate personality of the corporation.[The doctrine] that a corporation
may not be made to answer for acts and liabilities of its stockholders or those of legal entities to which
it may be connected or vice versa. [Panay, Inc. v. Clave, GR L-56076, Sept. 21, 1983, 124 SCRA 638].
Doctrine of ostensible authority. Also known as Doctrine of apparent authority. [The doctrine holding
that] if a corporation knowingly permits one of its officers, or any other agent, to do acts within the
scope of an apparent authority, and thus holds him out to the public as possessing power to do those
acts, the corporation will, as against any one who has in good faith dealt with the corporation through
such agent, be estopped from denying his authority [Prudential Bank v. CA, GR 103957, June 14,
1993].
Doctrine of outside appearance. The doctrine which states that a corporation is bound by a contract
entered into by an officer who acts without, or in excess of his actual authority, in favor of a person
who deals with him in good faith relying on such apparent authority.
Doctrine of piercing the veil of corporate entity. The doctrine used whenever a court finds that the
corporate fiction is being used to defeat public convenience, justify wrong, protect fraud, or defend
crime, or to confuse legitimate issues, or that a corporation is the mere alter ego or business conduit
of a person or where the corporation is so organized and controlled and its affairs are so conducted
as to make it merely an instrumentality, agency, conduit or adjunct of another corporation. [Indophil
Textile Mill Workers Union v. Calica, 205 SCRA 697 (1992)].
Doctrine of the real and hypothecary nature of maritime law. Mar. Ins. [The rule that] a ship owner’s
liability is merely co-extensive with his interest in the vessel, except where actual fault is attributable
to the shipowner. [Aboitiz Shipping Corp. v. CA, GR 121833, Oct. 17, 2008].
Doctrine of the third group. [The doctrine] to the effect that the right of the owner of the shares of
stock of a Phil. Corp. to transfer the same by delivery of the certificate, whether it be regarded as
statutory on common law right, is limited and restricted by the express provision that “no transfer,
however, shall be valid, except as between the parties, until the transfer is entered and noted upon the
books of the corporation.” [Uson v. Diosomito, GR L-42135, June 17, 1935].
Doctrine of ultimate consumption. Goods intended for civilian use which may ultimately find their
way and be consumed by belligerent forces, may be seized on the way. See Ultimate consumption
doctrine.
Doctrine of ultimate destination. The final destination in the territory of an enemy or under its control
making goods contraband under the doctrine of continuous voyage. See Ultimate destination doctrine.
Doctrine of ultra vires. Lat. Beyond the powers. The doctrine in the law of corporations that holds
that if a corporation enters into a contract that is beyond the scope of its corporate powers, the
contract is illegal.